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  • Thumbnail for  Predicting debt levels in leveraged buyouts
    Predicting debt levels in leveraged buyouts by Greenspan, Eli

    Various factors contribute to the level of debt financing used in leveraged buyouts. This paper examines the relationship between levels of buyout debt with two different categories of determinants. These determinants are broken into factors exogenous and endogenous to leveraged buyouts. Exogenous factors include credit market conditions along with industry and region of the acquired firm, while endogenous factors are firm specific, such as profitability, operating efficiency, and previous capital structure of target firms. Previous literature found that credit market conditions are the only significant indicator of debt in leveraged buyouts. This paper uses quantitative methods to show that firm specific metrics do in fact have significant relationships with buyout debt and can predict debt levels in leveraged buyouts.